Who'll save the Poles' bacon?
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IN PRINCIPLE, the 15-country European Union loves the idea of taking in another dozen or so countries, mainly in Central Europe. The practice is trickier. The biggest snag is that the would-be newcomers are poor, and have a great many farmers. Since today's EU devotes 80% of its budget to aiding farmers or poor regions, simply extending its current policies eastwards would cost existing members huge sums.
This week the European Commission unveiled its first detailed plan to solve this difficulty. One is badly needed: the EU has promised to try to complete negotiations with ten of the applicants by the end of the year. The commission's solution involves drastically watering down the regional and agricultural aid on offer to them.
The EU's biggest single subsidy to farmers these days is “direct payments”, simple income-boosters. The commission suggests limiting these in new countries to 25% of the level now paid in existing ones, rising to 100% over the first ten years. It argues that immediate direct payments on western levels to Polish or Hungarian farmers would harm their own societies by making farmers unduly rich by local standards.
The proposed solution on regional aid is similar. On current criteria, virtually every region in Europe's east would qualify for generous EU aid. This would imply either a large increase in the EU budget or a big switch of resources from today's poor regions in places like Spain and Greece. But the EU invokes a rule that no country can receive regional aid that is more than 4% of its GDP. Any more than that, so the theory goes, could not be safely absorbed. Conveniently, given the small economies of the eastern applicants, the 4% rule would tightly limit how much they could get.
So Spain, though twice as rich as Poland, would probably still get far more regional aid. The commission estimates that by 2006 the new members would be receiving regional aid worth euro137 per citizen, against an average of euro231 for Spain, Portugal, Greece and Ireland.
The applicants are cross. “How are we meant to explain to our farmers”, asks a Polish diplomat, “that their rich German neighbours will get four times as much financial help as they do?” But countries already in the EU may not be delighted either. Ailing Germany is by far the largest net contributor to the EU budget. It is worried by the long-term implications of the commission's proposals for farm subsidies. “If the common agricultural policy is not properly reformed,” says a German diplomat, “our total contribution to the EU could triple in a decade.”
The fear is that once countries like Poland are in the club, and are put on “the drug of direct payments”, they will block farm reform—and countries like Germany, Britain and the Netherlands will have to pick up the bill. But if the Germans and others insist on a proper farm-policy reform before the enlargement negotiations are over, the delay could be indefinite.
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